Asda, one of the UK’s largest supermarket chains, is set to eliminate hundreds of head office positions while enforcing stricter office attendance policies for its staff. More than 5,000 head office employees across three locations in Leeds and Leicester are affected by these changes, with 475 employees facing redundancies. This move represents less than 10% of Asda’s head office workforce, as the retailer grapples with declining sales and heightened competition within the sector.
Restructuring for Stability
In an internal announcement on Tuesday, Asda’s leadership shared the rationale behind the restructuring, aiming to strengthen the retailer’s market position by 2025. The communication, signed by Asda chairman Lord Stuart Rose and Asda board director Rob Hattrell, acknowledged the difficulty of such changes, stating, “Change is never easy and is unsettling, but the executive team believes it is necessary to enter 2025 in a stronger position, fully focused on serving our customers, delivering our ambitions and driving long-term growth.”
The overhaul comes after recent leadership transitions at Asda. Lord Rose, a former chairman of Marks & Spencer, has taken charge alongside Rob Hattrell, formerly of eBay. This shift in leadership followed co-owner Mohsin Issa’s decision to step back from his executive role in September, with his brother Zuber Issa also exiting as co-chief executive in June. The Issa brothers, known for their acquisition of Asda through private equity firm TDR Capital, have faced internal challenges amidst their ambitious transformation plans.
Redefining Work Expectations and Office Environment
Asda’s restructuring also includes adjustments to its hybrid working policies for head office employees, who will now be required to attend the office a minimum of three days per week beginning in January. The decision is intended to enhance collaboration and communication across teams as Asda focuses on cohesive operational strategies. To support this transition, the retailer has announced plans to revamp its Leeds-based Asda House, adding enhanced catering facilities, an onsite Asda Express, and more meeting spaces to foster a collaborative work environment.
Fixed-term contractors assigned to Asda’s IT transformation project have also been notified of their impending departures as the company continues to streamline its operational focus.
The Impact of Slowing Sales and Debt Management
Asda’s restructuring comes in the wake of recent sales performance challenges. The supermarket’s latest financial report, released in August, revealed a 2% year-on-year revenue growth for the first half of 2024, excluding fuel. However, like-for-like sales fell by 2.1%, with the second quarter showing an accelerated slump of 5.3% in like-for-like sales. This decline comes as Asda faces stiff competition from other leading supermarket chains such as Aldi, with its customer base showing signs of erosion.
With debt exceeding £4 billion, Asda has been seeking to stabilise its financial standing while enhancing customer appeal. The chain has already faced controversies regarding its UK workforce policies, including a trial four-day workweek that some staff members criticized for the demands of extended 11-hour shifts. Asda responded by piloting a different arrangement of 39 hours across five days, which has reportedly received positive feedback from trial participants.
Challenges and Controversies Surrounding Asda’s Leadership Changes
Since Lord Rose assumed leadership, the retail veteran has committed to revitalising Asda’s performance amidst a series of public controversies. He previously expressed disappointment with Asda’s recent performance, pledging to steer the supermarket towards a more sustainable and competitive future.
Asda’s workforce policies have faced scrutiny, including allegations that the company’s pay structure disproportionately favours certain roles over others. Warehouse workers, for example, have raised concerns that their pay exceeds that of their colleagues in other areas, leading to claims of unfair treatment. Asda has firmly refuted suggestions that its pay rates are determined by gender, standing by its commitment to equitable remuneration practices.
Looking Forward: Asda’s Path to Recovery
Asda’s management strategy now hinges on a combination of workforce restructuring, revised office policies, and enhanced facilities aimed at fostering a more collaborative work culture. The retailer’s upcoming quarterly results, due on Friday, are expected to shed further light on its financial standing and highlight areas where leadership might further adjust its approach.
The Workers Union Says…
“With Lord Rose and Rob Hattrell at the helm, Asda aims to navigate its way back to growth, addressing both internal and external challenges head-on. For its loyal customer base and dedicated employees, the hope remains that Asda can emerge stronger and more resilient.”
